Doesn’t it feel like everything comes in the form of a subscription now? From your TV and podcast streams to cloud software, fitness app memberships, and meal prep kits — phew, you pay a monthly fee for most things in your budget.
How much would you guess they wind up costing you? According to new research, whatever number you have in your head is probably not enough.
Most people surveyed by C&R Research severely underestimated the cost of their subscriptions. The average person guessed they spent $86 when they actually spent $219. That’s over 2.5 times more than their original estimate.
A monthly difference of $133 can be hard on your budget, but this might not be enough to throw your finances off balance at first. It’s time to think about why you have these subscriptions and what they’re doing to your finances.
How to Know if You Spend Too Much on Subscription Services
Here are some signs you might want to press cancel.
1. You Live Paycheck to Paycheck
The best budget is one that brings balance to your spending. Everything gets its due, whether it’s essential bills or subscription fees.
You might have too many subscriptions to your name if these fees start to outweigh other expenses and eat into what you need for other things. Eventually, you might even live paycheck to paycheck.
Living paycheck to paycheck means every dollar you bring in each month gets spent. That doesn’t sound too bad until you really start to think about it. Cash might be so tight that you literally can’t pay for the essentials until you get paid. If you lose some pay or have to pay an unexpected parking ticket, you may have no way to cover these issues.
2. You Aren’t Hitting Your Savings Goals
Living paycheck to paycheck is a natural precursor to this next sign. Many people put their savings on hold to give themselves more breathing room in their spending.
But suppose you forgo savings so that you can afford more services. In that case, you won’t have an emergency fund to cover the unknown, like the check engine light on your car or an unexpected prescription for a persistent sinus infection.
If you’re in a similar position, online loans can help you smooth over these unexpected expenses. You can visit MoneyKey to learn more about how online loans work in an emergency.
In a nutshell, online loans are designed as momentary and emergency relief. You should focus on rebuilding your emergency fund while you repay your loan online. Otherwise, you could wind up wracking up a lot of debt. And, if you’re already living paycheck to paycheck, how can you afford that?
3. You Don’t Use All Your Subscriptions
This last sign may have fewer financial consequences than the first two, but it’s just as indicative that there’s a problem. With so many options out there, it’s easy to collect more services than you can use in a month.
You might start to gain items from a subscription box that do nothing but collect dust. Or you might never watch shows hosted on Hulu when you’re focused on Netflix and Prime. Either way, you’re paying top dollar for stuff you don’t use.
5 Ways to Spend Less on Your Subscriptions
The obvious answer is to cancel subscriptions you don’t use, but there are some steps that come before that. Here’s what you can do to get your finances in order.
1. Audit Your Streaming Services
Living without a single subscription may be unrealistic in 2023, now that most things come in this format. However, you can whittle down your list to make sure you aren’t overspending.
Be honest with yourself when you think about how often you use each membership. You’ll want to keep the ones you actively use on a weekly (if not daily) basis.
2. Sit Down with Your Budget
You should do the first step in tandem with making a budget. This way, you have a good grasp of how much money you can spend on these services. Knowing your hard limit can help you set a number of services you can reasonably afford, so you know which ones to cut.
3. Establish Emergency Savings
A well-balanced budget should prioritize emergency savings. This way, you can handle the unexpected without taking out an online loan.
You want to automate a monthly contribution towards an emergency fund. Once you set up a monthly contribution you can afford, you can play with the money you have left over.
4. Use a Subscription Tracking App
Sometimes, it’s the subscriptions you forget about that do the most damage. You know the ones — the free trial you started at the beginning of last year and never got around to cancelling.
Tracking apps like Trim or Rocket Money help you bring these forgettable services to the foreground. They calculate just how much money you waste, and they can even help you reduce your costs or cancel your accounts.
5. Share Services with Friends and Family
If you can’t afford to keep up with all your subscriptions — but to say goodbye would be too hard — consider splitting logins with loved ones. You can pay a fraction of the price of your membership if you share the monthly bill.
Bottom Line
Subscription fatigue is a growing phenomenon, with two out of three people cancelling one service in 2022. It makes sense to jump on the bandwagon. Now that everything is subscription-based, juggling everything can be hard on your finances. Keep this in mind for the year ahead and be more mindful of your budget.
